Casino Enterprise Management

Most anyone reading this commentary, whether printed or (especially) electronic, knows the events of Friday, April 15, 2011, and the release of funds to the rank and file players several days later. The purpose of this commentary is not to argue morality and ethics and the law, but rather to ask the simple question: What now?

The vast majority of my colleagues in the brick-and-mortar casino poker business are already celebrating and high-fiving each other in anticipation of the gigantic influx of online poker players left without a game or 12 to play in. They reasonably argue that demand in search of supply will lead the abandoned online players to the doorsteps of their card rooms. On the surface, this appears to be a logical and cogent argument. Being a lifelong pessimist and a natural contrarian, I think that this celebrating is premature, because I thoroughly believe that the absence of a thriving online poker industry in the United States is harmful to the American casino poker industry in both the short and long term.

Supply and Demand of Online Poker
What exactly constitutes the supply of online poker? Now that you’ve stopped laughing and are still with me, I’ll need to break down the components of the argument that lead to that conclusion. Let’s consider what is being supplied by the online poker rooms both in terms of product and price. The formats and opportunities offered by online poker rooms are substantially more varied and different than that of brick-and-mortar (B&M) casinos; six-handed max and heads-up games, 5, 6, 7, 8 and 10 game rotations, Rush Poker (courtesy of Full Tilt), and of course, the ability to play as many games as one’s lack of attention span will facilitate. All of these formats are offered at micro, mini, low, medium, high and nosebleed stakes for both cash games and tournaments. Additionally, there are the various forms of Sit-n-Go’s (SNGs) and double or nothing tournaments offered at all buy-in levels. These are games and stakes that are generally not found in brick-and-mortar poker rooms, and not because those of us that run these establishments don’t want to offer them.

Cash Games
When it comes to the multi-game rotations, these players are generally hard to round up and seat at one physical location. When these types of games are finally able to be spread in a B&M card room, they usually run without a list then run short-handed before breaking. Also, these multi-way games last a precious few hours more often than not. The infrequent existence of these games starts the vicious cycle; the game never starts because not enough people want to play and not enough people get on the list because the game never starts. The ability to list players from every time zone on the planet has overcome this vicious cycle. As for Rush Poker, the need for a constantly regenerating pool of players and the lack of a Star Trek-style transporter combine to make that strictly an online offering.

As for six-handed maximum, no limit games and heads-up games of various forms, there are many reasons why these aren’t viable in a B&M casino setting. Without discussing the expected revenue per square foot of poker room real estate that my colleagues and I need to generate to keep our rooms open and our paychecks being issued, let’s try to understand the perspectives of the players, dealers and brush personnel.

A. When players walk into a room and see short-handed tables or heads-up games going, they reasonably and correctly inquire as to why the available spots aren’t being filled from the list. These must be spread on full size tables, because in poker room managers’ conversations with general managers, we cannot justify the permanent or temporary installation of special six-handed or heads-up tables for very infrequent games.

B. For dealers, these games present them with the very definition of a lose-lose situation. First, a very significant portion of pots in these games are won uncontested pre-flop, which usually results in no tokes. Second, because of all these quick wins, the dealers find themselves working quite a bit harder and getting out many more hands per hour. The result is that they are dealing more hands than ever for quite a bit less compensation, the classic morale killer that I, as a poker room manager, try to avoid when unnecessary.

C. The brushes, hosts, seating coordinators, et.al., have another problem, that is the higher player turnover in short-handed games. Eighteen players can make two nine-handed or three six-handed tables; that much is self evident. Player turnover in a nine-handed $1-$2 NLH game with a $4 rake and a $1 jackpot fee is estimated at just over two players per hour based on buy-ins consumed per hour. At $5 and $1 or $5 and $2, this turnover figure goes up considerably. Make these tables six-handed and the turnover number goes up yet again. Let’s be very conservative and say that the number jumps to about three players per hour in six-handed games. So, after six hours, the two nine-handed games go through six hours (two tables x two players) = 24 seats turned over. In the six-handed games, the three tables go through six hours (three tables x three players) = 54 seats turned over. When these players are waiting simultaneously for unavailable seats, this bottleneck creates what we in the business call the player list, or board. Obviously, the slower turnover of the nine-handed games allows us the opportunity to create a list and then spread more games, whereas the short-handed games produce rapid turnover, a lot more work from all poker room personnel and few, if any, extra games.

Tournament Games
Multi-table events, single table Sit-n-Go’s, double or nothing tournaments, you name it, are offered at all stakes. The main attraction is the value presented to the players based on the size of the fields. The World Series of Poker of recent history, notwithstanding, no B&M poker room can offer the field size, value, variety and payouts of the tournaments that can be found online. With many tournaments starting at all times on any given day, online players have plenty of choices and will always find large fields at affordable prices, all because of the virtually unlimited tables and capacity available to the online card rooms. If someone wants to play in a tournament with more than 3,000 entrants playing at the same time in a non-flighted event, then an online card room is the only place to go. At some point, the meters or yards between tables at a B&M poker tournament become a major constraint. These gargantuan online fields produce payouts that are unable to be duplicated at the same buy-in range in the B&M world. To move up to a B&M tournament that produces the same payout, the average online player would have to buy into much more expensive events and risk going broke much more often. This risk accelerates when the higher B&M tournament entry (house) fees are combined with the smaller field sizes and lower payouts. In other words—and this is based upon the fact that dealers, equipment, and especially, casino square footage are all very finite—B&M casinos basically only offer tournaments of smaller fields that cost the players more to play in regardless of buy-in price. The necessity of poker rooms to adjust their tournament entry fees so that the average revenue per table hour in tournaments is at least somewhat comparable to that of cash games has enabled the online tournaments to offer a better value. After the first few tables, a poker tournament that takes up a goodly portion of the square footage in a poker room metamorphoses from loss leader to staple offering, and the prices (entry fees) charged and revenue produced must reflect that.

Other Features of Online Poker
So far, the types of games have been discussed, but it would irresponsible to not mention the other factors that combine to make online poker vastly different than that of the B&M casino variety. These features are, namely, the convenience of playing at home or anywhere with available Wi-Fi and much more importantly, the ability to participate in multiple games simultaneously. Not considering the actual games and formats being played, people are playing solely online for a number of reasons:

A. There is no legal casino gaming in their geographic area.

B. They are not of legal age to participate in available B&M casino gaming.

C. They play at stakes so small or, much less often, so large, that the B&M casinos don’t offer these games.

D. Online poker offers the ability to multi-account, that is, the ability to circumvent the rules governing one hand to a player in cash games and one entry to a tournament player. (While the online poker rooms have made progress in fighting this form of cheating, let’s not bury our heads in the sand and pretend that it either doesn’t exist or does not appeal to people that can remain anonymous. We don’t have the time or space to discuss the opportunities for collusion via instant messenger or phone, but this form of cheating is much less common in B&M poker rooms.)

E. Most importantly, the ability to play on more than one table at a time is the feature that has almost defined the difference between B&M and online poker.

Multi-Tabling Explored
The previously mentioned lack of attention span is certainly not the most important reason, nor the sole reason for playing on more than one table at one time. Multi-tabling allows a player to extract an edge many more times per hour and usually with a lot less bankroll at risk. As a player moves up in limits or blind sizes, the talent and knowledge of one’s opponents increase, therefore, one’s edge decreases. As most poker professionals, coaches and authors will agree, 90 percent of the profit a player makes is due to the bad play and mistakes of the opponents. I further submit that a profitable player should be playing the largest games that the player’s bankroll can withstand. So, it makes perfect sense that a player with a bankroll commensurate with play at the $10-$20 blind NLH level would generate as much, if not more, profit by playing in a dozen or so $1-$2 blind games rather than one $10-$20 blind game. While the chance of a score the likes of which is possible at $10-$20 NLH decreases dramatically, so would the risk, given that the opponents in the $1-$2 games would be expected to be much worse, on average, than the opponents in the $10-$20 games. Like any investor, a poker player putting one’s bankroll to use in a fashion that affords both lowered risk and steady, elevated returns would be acting in a reasonable and rational way. There is just not a way that casinos can offer an experience or product similar to multi-tabling in any B&M poker room.

Direct Consequences of Black Friday
So far, in a brief period of time, PokerStars, Full Tilt and Ultimate Bet/Absolute have pulled their advertising from poker publications. In the short term, this will be a small boon to the B&M poker rooms, as there will be less competition for the available ad space and prices figure to decrease. A market correction will have to happen, which will probably result in one or more magazines ceasing to exist, especially those periodicals that were too heavily dependent upon the easy and readily available poker website money. Those magazines that more readily serve the B&M casinos and players will be the most likely candidates to survive.

Also, it appears as though television advertising by poker websites will be eliminated. Without presenting sponsors and commercial advertising, the best that could be hoped for would be for poker broadcasts to be relegated to undesirable time slots. Less exposure to novice players can only mean the amount of people playing poker would grow more slowly, or heaven forbid, decrease.

One would have to assume that eventually, sponsored poker players in the U.S. will see their backing from those three online rooms slashed or eliminated since there is no reason to use those professional players to advertise and market to players that can’t buy their product. This figures to depress turnout at not only the WSOP, but at most poker tournament events. Smaller fields will, of course, produce smaller prize pools. Smaller fields and prize pools would be probably be less interesting and draw less attention and possibly attract fewer new players.

Conclusions We Can Draw
Considering that online poker rooms and brick-and-mortar poker rooms offer vastly dissimilar products, one must deduce that online players orphaned without a supply will not necessarily demand what the B&M poker rooms have to offer. Also, it is reasonable to assume that players playing in both venues will not have enough time in the day to appreciably raise our head counts and game hours in the B&M poker rooms. Furthermore, with the elimination of advertising and sponsorship dollars causing the possible shuttering of poker print publications, and the curtailing of poker broadcasts leading to far less coverage of our game and industry, the expansion of the player base and of the game might slow or reverse. To paraphrase Jay Wiles, the poker room manager at WinStar World Casino, and a colleague whom I like and respect, “If something is good for poker, it is good for all of us in the business.” As for me, I’ve yet to figure out how what happened on April 15, 2011, was good at all for the American casino poker industry.

Elliott Schecter has been in the gaming industry for more than 18 years, all of which have been spent in table games and poker. He is currently the Poker Room Manager at Downstream Casino Resort in Quapaw, Okla., and has been there since the property opened in 2008.